We make it. They take it.

We, the construction industry literally create value.

The construction industry makes buildings. So why do we increasingly feel inappropriately rewarded for the value we create? Why has making a building become so complex? Rarely do buildings fully reflect what we are capable of, leaving occupiers disappointed?


Is it our fault? Do we do this to ourselves? Or could there be a cause that as of yet we’ve not collectively acknowledged?

Unless you are a philanthropist or volunteer you work for profit. Sustainable profit accumulates as wealth. There are two ways to do this; create value, or extract value. Today many organisations focus exclusively on the latter. Relentless unsustainable extraction to maximise shareholder wealth. Carillion was just such an organisation. They exploited supply chains, the value creators. They extracted value from clients, private and public alike. If we are all to be wealthier, then a new balance is needed between creation and extraction.

A sweeping generalisation, but the value-extractors are developers (such as Persimmon Homes) and the rent-seekers are contractors (such as Carillion). Value-creators are the supply chain (architects, engineers, product manufacturers, skilled trades etc).

This has not always been the case. It is in fact the results of a global shift in the way the financial sector operates and has been happening for many decades. It is called financialization.

Our industry has been financialized.

Until recently I had not heard the word financial used that way. Earlier this year I bought Mariana Mazzucato’s excellent book ‘The Value of Everything’ 1. Mariana is an economist and in the book she argues that the financial sector in it’s singular goal of wealth generation, has lost sight of what value is. Today all industries have been materially changed by this, all have been financialized.

What does this mean for construction? I believe it is the singular biggest and as of yet unacknowledged cause of the issues we face as an industry. It is now clear to me that financialization has put huge stress on the industry. Over forty years I’ve seen firsthand our industry change for the worse.

That is what compelled me to write this paper.

It is my personal view, but it is grounded in very real experience.

This is not a political paper, it is an economic one. It is about the rise of Asset Manager Capitalism and the impact that has had on our industry.

It is a simple paper, it does not analyse in detail the industry’s own issues rather it sets them into a context that has been unknown to date and hence effectively beyond our control. But it is not hopeless. We can change this. I propose there is real potential for a radically different view of a future construction and property industry.

It is up to you.

But I’d welcome you joining me in this much needed transformation.

Paul Fletcher, August 2018

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